Capital markets remain beset by fears that the Fed has cut rates too slowly, leading to an increased likelihood of a US recession.

1. The fear in the markets that the US is approaching an economic recession remains. However, US 2-Year and 10-Year Treasury Yields have risen quite firmly, and major US equities indices are trading higher on off-hours futures exchanges. In Asia, stock markets are much more bearish, with the HSI down by almost 2% on the day.
2. In the Forex market, the Canadian Dollar has been the strongest major currency since today’s Tokyo open, while the Swiss Franc has been the weakest. There are valid long-term trends against the US Dollar in the USD/JPY currency pair and in the EUR/USD currency pair, although the latter is looking more doubtful. Recent hours have shown a minor recovery in the US Dollar.
3. Friday’s non-farm payrolls data came in notably lower than expected, which sent the US Dollar firmly lower as it increased expectations concerning Fed rate cuts over the near term. The Fed is expected to cut its Federal Funds Rate by a total of 1% in increments by the end of 2024.
4. Most commodities, especially softs, are looking weak. However, Gold remains relatively bullish as it trades only about 1 day’s average range below its record high above $2,500.

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